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Blair urged to tackle pension crisis

David Frost, the director-general of the British Chambers of Commerce (BCC), will lead a delegation for a meeting with the prime minister tomorrow. It comes at a time of increasing worries in business about pensions.

“The real message we want to get across is on public-sector pensions,” Frost said. “All the emphasis is on the employers and employees, but the government needs to get hold of this problem.

“Before the last election the unions said ‘boo’ and the government caved in. It has got to show some backbone. The country is facing a £700 billion public-sector pension liability. We’ve had enough talk on this; we need some action.”

Ministers have pledged to raise the retirement age for public-sector workers from 60 to 65 by 2018, and so try to reduce the future cost to taxpayers of their pensions. But business fears that, faced with a threatened strike by 3m workers, the government will back down.

Frost said firms and their employees were increasingly resentful of having to pay increased taxes — and higher council-tax bills — to maintain final-salary pensions in the public sector when their own pensions were being scaled back.

The BCC will also press Blair on its long-standing worries about the rise in red tape. It estimates the cumulative cost of business red tape introduced by Labour since 1997 to be nearly £40 billion.